AUDUSD Drifting Towards 1.02 as RBA Says Currency May Spur Rate Cuts

Australia’s dollar traded 0.5 percent from the lowest in more than four months after Reserve Bank Assistant Governor Guy Debelle indicated monetary policy may be eased as the currency’s strength damps the economy.

Demand for the so-called Aussie was limited after Debelle said in a speech in Adelaide today the central bank retains “scope to lower interest rates further, should the need arise, including to counterbalance the pressures of an elevated exchange rate.” Local bonds rose, pushing yields on benchmark 10-year debt to a one-month low as global stocks retreated on concern Italian elections will result in renewed turmoil in Europe, boosting demand for haven assets.

“Comments from the RBA are certainly weighing on the Australian dollar,” said Kumiko Gervaise, an analyst at Gaitame.com Research Institute Ltd. in Tokyo. “Uncertainty over whether or not another vote will be required in the Italian parliamentary election is likely to keep risk appetite on the back foot.”

Bloomberg

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